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Virginia Severance Agreements

Employees in Virginia are generally considered “at will,” which means they can resign
and/or be terminated at any time. When employment ends, an employer may offer a severance package to an employee in exchange for the employee’s waiver of rights. However, employers, in the absence of an agreement or severance policy, generally have no obligation to provide employees severance pay. If severance pay is offered, an employer will offer the employee a Severance Agreement.

What are Severance Agreements?

A Severance Agreement is a contract between the employee and an employer that provides the terms of the end of employment between the employer and the employee. Severance Agreements may also be offered to employees who are laid off or facing retirement. In addition, depending on the circumstances, a Severance Agreement may be offered to an employee who resigns or is terminated. The Severance Agreement must have something of value (also referred to as consideration) to which the employee is not already entitled. Employers are generally required to provide an employee time to consider the Severance Agreement before signing.

An employee usually has a 21-day consideration period to accept and at least a 7-day revocation period to revoke an employer’s Severance Agreement if the employee is over 40 years of age. For a group or class of employees (i.e., two or more employees) age 40 or over, employers must provide a 45-day consideration period and at least a 7-day revocation period.

Commonly Considered Terms

Items and/or terms that the employer and employee may place in these agreements include:

• Financial terms, tax issues and timing of severance payments

• Continuation of employment benefits (i.e. health, etc.)

• Issues related to unemployment compensation

• References (positive, neutral)

• Claims to be waived (i.e. discrimination, etc.)

• Confidentiality

• Non-Disparagement

• Re-hiring potential

• Scope of possible non-competition

• Preservation of trade secrets

• Recommendation letters

• Consequences of violating the agreement

Severance Agreements will also usually include a general release or waiver that requires that the employee cannot sue his or her employer for wrongful termination or attempt to seek unemployment benefits upon the effective date of a fully executed Severance Agreement.

Conclusion

Before an employee signs a Severance Agreement, he or she should consult with an attorney to discuss the rights that he or she may be waiving and the terms of the Severance Agreement. If you need assistance with a Severance Agreement or other employment matter, please contact our office at (703) 668-0070 or at www.berrylegal.com to schedule a consultation. Please also visit and like us on Facebook.